I love my savings account. I love knowing that I’m earning money on my money. I especially love it because I know that I’m earning more than anyone else is.
Still, there comes a point where it’s just not worth it to micro-manage your finances and throw every last dollar in the account with the hopes of making a little bit of extra interest.
There are four reasons why it’s just not worth it:
- The Stress Factor
- The Low Reward Factor
- The High Risk Factor
- The Time Factor
Let me explain:
I usually leave about $200-$300 in each of my checking accounts (Bank of America and ING) and put everything else on my credit card. I don’t use cash all that often so I rarely have to worry about running low.
Well, rarely isn’t always, and last week I ran into a problem. After transferring a large majority of my paycheck into savings, my roommate reminded him that I owed him for groceries (we switch off, and it adds up for about a $150 transfer each time). No problem, right? Well…as it turns out, I also had a $100 automatic transfer coming out of that same account to pay off my student loan. To make it worse, this all happened on a Friday and two business days to transfer more money in from my other checking account wouldn’t happen until Tuesday so I was stuck.
I had a few choices: I could just suck up a $35 overdraft fee, then try and get it reversed. When I get within $50-$100 every month, I’m probably cutting it too close. This is a case of The High Risk Factor.
I could withdraw money from the ING ATM and deposit in my Bank of America ATM, which would post immediately an save me. Sounds like an obvious choice, even if it is a little time consuming. This is a perfect example of The Stress Factor.
Anyway, I headed to the CVS which has the ING ATM, and it was out of service. No problem, they must have another one somewhere. I whipped out my free iPhone, plugged in my location and up popped another ATM about 15 minutes away. I got there but that one was ALSO out of service. What gives ING? Ah, the frustration. Plus, I had just spent 25 minutes to find out that two ATMs weren’t working. This is clearly The Time Factor.
The next closest one was REALLY out of the way, so I headed home a bit disappointed. I stopped by the Bank of America ATM, deposited the $20 I had in my wallet and saw that I was $6 in the red. Don’t forget that I did all of this because I wanted to keep an extra $100 in my savings account! That $100 would make me only $2 per year, or less than 20 cents per month! That’s not exactly going to get me rich any time soon. It actually isn’t even enough money for me to spend even a minute thinking about! Yes readers, this is The Low Reward Factor.
When I got home, my roommate was waiting for me and had some unimportant news for me: “Oh, by the way, you transferred me too much, I’m sending you $12 back right now.”
So in the end, I didn’t go over and I wasn’t charged, but I did waste about 40 minutes walking around D.C. searching for an ING ATM and aged about 15 years while worrying about a $35 fee. I wanted to save a very little bit of money so I risked a whole lot more. I think it’s time to take a step back and relax a little bit.